Braemar Hotels & Resorts Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Braemar Hotels & Resorts Inc. on June 1, 2021. The filing discloses a definitive agreement to acquire the 138-room Mr. C Beverly Hills Hotel and five adjacent luxury condominium residences in Los Angeles, California. The transaction is expected to close on or prior to July 9, 2021, subject to customary closing conditions.
Key Financial Metrics and Transaction Details
- Total Consideration: $77.9 million ($65.4 million for the hotel; $12.5 million for condominiums).
- Price Per Key: $474,000.
- Funding Structure: Approximately $30 million cash (majority used to pay down existing debt), 2.5 million OP units, 500,000 warrants (strike price $6.00), and a $30 million mortgage loan.
- Historical Performance (Trailing 12 Months as of Dec 31, 2019):
- Hotel Net Operating Income (NOI): $3.9 million.
- Capitalization Rate: 5.0%.
- EBITDA Multiple: 16.5x.
- RevPAR: $251.14.
- Occupancy: 75%.
- Average Daily Rate (ADR): $334.40.
- Projected Yield: Management expects a stabilized yield of over 8% within the next three to five years.
Material Changes and Outlook
The filing does not report material changes to the Company's existing financial statements for a prior period but introduces a significant new asset acquisition. Management commentary highlights the strategic value of the property, citing a target stabilized yield exceeding 8%. The transaction is contingent on customary closing conditions, and the Company provides no assurance that the deal will be consummated by the target date or at all.
Investor Verification Checklist
- Verify the final closing date and confirmation that all customary closing conditions have been met.
- Confirm the final allocation of the $77.9 million purchase price between the hotel and condominium units.
- Review the terms of the $30 million mortgage loan and the impact of the cash portion on the Company's existing debt levels.
- Assess the valuation of the 2.5 million OP units and 500,000 warrants issued as part of the consideration.
- Monitor the Company's ability to achieve the projected stabilized yield of over 8% given current market conditions post-2019.